Steps in the Portfolio Management Process
When establishing and managing a client’s investment portfolio, certain critical steps are followed in the process. We describe these steps in this section.
Portfolio Perspective: Risk-Return Trade-off, Downside Protection, Modern Portfolio Theory
Historical Portfolio Example: Not Necessarily Downside Protection A major reason that portfolios can effectively reduce risk is that combining securities whose returns do not move together provides diversification. Portfolios: Modern Portfolio Theory
Portfolio Perspective: Diversification and Risk Reduction
Historical Example of Portfolio Diversification: Avoiding Disaster Portfolio diversification helps investors avoid disastrous investment outcomes. This benefit is most convincingly illustrated by examining what may happen when individuals have not diversified. Portfolios: Reduce Risk
Efficient Frontier: A Risk-Free Asset and Many Risky Assets
Capital Allocation Line and Optimal Risky Portfolio The Two-Fund Separation Theorem
Efficient Frontier: Investment Opportunity Set & Minimum Variance Portfolios
Investment Opportunity Set Addition of Asset Classes Minimum-Variance Portfolios Minimum-Variance Frontier Global Minimum-Variance Portfolio Efficient Frontier of Risky Assets
The Power of Diversification
Correlation and Risk Diversification Historical Risk and Correlation Avenues for Diversification
Portfolio of Many Risky Assets
Importance of Correlation in a Portfolio of Many Assets
Portfolio Risk & Portfolio of Two Risky Assets
Portfolio of Two Risky Assets Portfolio Return Portfolio Risk
